Alstom and GE chiefs celebrate 'three-fold win'

Reuters

Published 12:28 am, Thursday, June 26, 2014

Photo: VINCENT KESSLER, REUTERS

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General Electric Chairman and CEO Jeffrey Immelt (R) and Alstom Chairman and Chief Executive Patrick Kron pose for a picture at their arrival at the turbines production unit of the Alstom plant in Belfort, June 24, 2014. REUTERS/Vincent Kessler less

General Electric Chairman and CEO Jeffrey Immelt (R) and Alstom Chairman and Chief Executive Patrick Kron pose for a picture at their arrival at the turbines production unit of the Alstom plant in Belfort, June ... more

Photo: VINCENT KESSLER, REUTERS

Alstom and GE chiefs celebrate 'three-fold win'

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BELFORT, France -- In a joint trip to the eastern town of Belfort that is the cradle of their cooperation in France, the bosses of Alstom and General Electric defended their tie-up as good for business, jobs and France.

French train and turbine maker Alstom agreed over the weekend a $16.9 billion deal with GE that had been fiercely challenged by the French government and will be the U.S. conglomerate's biggest acquisition ever.

To win over the government, GE has in the past weeks taken out full-page French newspaper ads reading "Tomorrow will be made in France" and flown its CEO Jeff Immelt several times to Paris to meet President Francois Hollande and his Socialist government.

Now with the deal sealed, Immelt on Tuesday headed to Belfort, a town in eastern France where Alstom and GE workers have been building power turbines in neighboring plants for the past 15 years.

All smiles, Immelt and Alstom CEO Patrick Kron chatted with local workers and posed for photographs in front of the Alstom steam turbines that will belong to a 50:50 joint venture as part of the deal sealed after a two-month tug-of-war with the government.

"It provides a future for the activities and employees of Alstom, it has an industrial logic that GE and ourselves called for, and it addresses the government's concerns regarding (France's) energy transition and nuclear sovereignty."

Alstom's steam turbines are fitted in 30 percent of the world's nuclear plants, including those sold by French utility EDF, and the government was particularly worried to see them fall into foreign hands.

In May, it rejected GE's original offer - to buy outright all of Alstom's power business - and pushed during the following weeks for a more balanced alliance that would preserve France's energy independence, jobs and industrial know-how.

Even after it got GE to substantially reshape its offer last week, the government threatened to block a deal until it secured on Sunday an option to buy 20 percent of Alstom from its current top shareholder Bouygues.

Economy Minister Arnaud Montebourg said the move would ensure that GE fully meets the state's demands, notably to create jobs and maintain decision centers in France.

Kron sought to reassure Alstom workers that the tie-up would guarantee them jobs over the long run, stressing that GE and Alstom complemented each other well in terms of technology, industrial sites and markets.

Holding firm

Kron also said he intended to remain at the helm of Alstom for the time being. He had said in May, when defending GE's original offer, that he did not see himself as indispensable over the long run to manage the French company once reduced to its smaller rail arm.

Kron has faced harsh criticism from Montebourg over the past weeks. The minister even accused him of a "breach of national ethics" for not keeping him informed of GE's approach.

"I've held firm because I believe in this project," Kron said. "Now I want to carry it out." Kron and Immelt were flanked by GE France chief Clara Gaymard and Steve Bolze, the head of GE's global power division.

Once the GE-Alstom deal closes - which is expected in the first half of 2015 - 65,000 Alstom workers out of 96,000 worldwide will be working for GE, whether in the global gas turbines business it will have fully acquired or in the joint ventures it will have set up with Alstom.

In Belfort, GE has employed some 1,700 people since 1999, when it bought Alstom's gas turbine division and chose the town as the site of its European headquarters.